Back Under the Same Roof

PORTLAND'S URBAN RENEWAL agency has been enduring something of a slow-burn crisis.

Approaching the dregs of its largest revenue barrel—the millions it's borrowed over the decades through tax increment financing—the Portland Development Commission (PDC) has been shedding staffers and molding itself into an economic development agency instead of the construction outfit it's been.

That crisis will only intensify after the next five years, city figures show. And now, the Mercury has learned, officials are mulling over some surprising options for propping the agency up—including one possibility liable to set off a political earthquake: carving up the Portland Housing Bureau (PHB) and handing some or all of it back to the PDC.

Pulling that off would set the clock back to 2008, before city council stripped oversight of affordable housing construction from the PDC and gave it to what was then called the Portland Bureau of Housing and Community Development. These talks come in the midst of separate-but-related discussions—among the city, Multnomah County, and Home Forward—over whether to pool regional spending on homelessness programs, raising further questions about the housing bureau's role.

"It's a fair question to ask," says Commissioner Dan Saltzman, confirming that he's discussed consolidation with Mayor Charlie Hales' office, among several other options. "It could be more through intergovernmental agreements, or it could be taking a step back and reintegrating the two."

Saltzman says his bureau is subject to the same funding drop-off as the PDC. By council policy, 30 percent of the city's urban renewal funding is set aside for affordable housing and given to PHB to lend out or invest as it sees fit. If the overall pie shrinks, then so does the housing bureau's piece of it.

But Saltzman also acknowledges that some non-budgetary concerns have become part of the debate.

Private developers have complained for years about the housing bureau's strict criteria for construction awards—in which proposals are graded on whether they include women- or minority-owned businesses or offer a social services component. The housing bureau, since its inception, has also focused on projects catering to the neediest of Portlanders—projects that are less market friendly.

And since June, when Hales handed the housing bureau to Saltzman, the critics who miss doing business with the PDC have found a receptive audience. Saltzman even privately mused that he wished more housing cash could be spent on housing for Portlanders making closer to the city's median income.

"Private developers aren't feeling like they're as welcome as in the past," Saltzman says. "They're not given as much due consideration as opposed to a nonprofit community organization."

Asked if developers would like a larger share of the city's construction pie, Saltzman answered: "That's what I'm hearing."

Notably, Saltzman also mentioned talks with Ed McNamara, a longtime Portland developer now working for Hales as a policy director on development and PDC issues. McNamara—who has done business with the PDC, building the mixed-income Ramona Apartments—has tiny stakes in two housing bureau buildings. He's also sparred with the housing bureau—with complaints that echo some of what Saltzman's heard.

According to a letter obtained by the Mercury, McNamara complained to Housing Director Traci Manning in 2012 after he was turned down for a housing bureau project in the Lloyd District. His proposal was passed over, he wrote, because of a low score on "equity," despite having a higher overall score than the winner.

"I've had some good conversations with Ed," Saltzman says, "and I'm trying to assess to what extent this is a problem."

Sources say McNamara is sensitive to, and privately up front about, the touchiness over his role in Hales' office and any perceived ethical conflicts. McNamara confirmed the discussions with Saltzman but declined to comment in detail for this article, citing his financial interest in the two PHB projects.

City Attorney James Van Dyke told the Mercury, however, that McNamara is free to discuss housing bureau policy so long as he doesn't discuss projects in which he's directly invested.

The timing around any bureau changes remains nebulous. Some city sources insist there are no immediate plans to mush the agencies together—but that talk about realigning their relationship could grow more urgent in the next few years. Dana Haynes, Hales' spokesman, says his boss is committed to working on urban renewal funding and that discussions may involve the housing bureau.

Complicating those talks is a nascent effort to better integrate regional spending on homelessness. Officials insist that's separate from the urban renewal issue. Except that one extreme option, creating a regional agency on social services spending, would make it easier for PDC to gobble up what's left of the housing bureau.

It's also early in that process—meetings have been sporadic and may stop when the county's lead negotiator, Commissioner Deborah Kafoury, steps down to formally run for the vacant county chair post next year.

Meanwhile, even the mere whisper of consolidation has sounded political alarms.

Margaret Van Vliet, who led the housing bureau from its creation until taking a job running state housing policy for Governor John Kitzhaber in 2011, says she worries the city's neediest clients could suffer. A 2008 city report recommended the current structure as a way to better link housing construction to social services.

"I'd have some serious concerns about undoing what we've done over the past four years," she says. "I would hope there would be good analysis and discussion of the policy gains and outcome gains that were made when the bureau was created."

Commissioner Nick Fish—who ran the housing bureau since its birth, until losing it this year—strongly suggested staying the course. Fish, despite running the city's water and environmental services bureaus, has repeatedly had harsh words for the mayor over housing and homelessness policy this summer and fall.

"I'm not sure why we're having this conversation," he says. "We'll always have critics who feel they don't have the same privileged access to funding. Too bad. That's no excuse for retreating."

Saltzman says he's trying to align his thoughts with Hales' and that he's doing his due diligence as a new housing commissioner—saying he better understands the high points of the old system now that he's running the new one.

"I'm hearing more about the strengths," he says. "I'm not sure how all this plays out. But the fact that these conversations are happening bodes that some change is in the air."